BP Continues to Ignore Its Promises

As BP was getting slammed in court for its conduct while operating the ill-fated Deepwater Horizon oil spill rig, the company has been quietly working behind the scenes to avoid paying claims under the landmark economic settlement’s terms – terms the company expressly agreed to and vouched for on numerous occasions in open court. BP has been arguing that damage claims should be calculated differently for certain industries, including farmers, construction and professional service companies, because those entities allegedly earn fluctuating profits which could yield large loss calculations.

BP argued that the settlement required that these businesses re-allocate and tie their revenues to their expenses over a four-year period, and in some circumstances, “smooth” those revenues over from month to month, effectively destroying claims for those industries in the settlement. BP’s intention is to make the claims harder on companies, and hopefully, keep many businesses that qualify under the settlement from being paid.

BP contends that failure to use an accrual method or a smoothing adjustment in calculating the claims for these industries results in “fictitious losses” and that Administrator Pat Juneau is misinterpreting the settlement. But we must remember:

BP and its army of lawyers, accountants and economists never once requested that the settlement require any specific industry analysis on the accrual methodology or revenue “smoothing.” Instead, the settlement gives businesses the option of choosing between an accrual or cash revenue basis based on how the entity earns revenue, and the settlement makes no mention of a smoothing requirement.

BP hailed the settlement as monumental during the fairness hearing due to the ease by which a business could determine its eligibility. All a business had to do was be in the covered economic zone, be an included business and meet the revenue test – BP acknowledged time and time again that no other requirements were necessary to establish the business’s connection to the spill.

Originally, BP took its unfounded arguments to claims administrator Pat Juneau, a neutral party, who found no evidence supporting BP’s contentions. BP then appealed Administrator Juneau’s findings to Judge Carl Barbier, and he initially sided with Juneau. Judge Barbier requested briefing and supporting documents on the matter and stayed the claims in the claims facility in order to ensure full evaluation of BP’s contentions in light of the settlement.

After careful consideration of briefings by both BP and the Plaintiffs Steering Committee (PSC) – as well as numerous declarations from experts and supporting documentation – Judge Barbier reaffirmed his initial position and found no evidence supporting BP’s arguments. Tellingly, Judge Barbier pointed to emails from BP’s own lawyers that explicitly contradicted BP’s new position before the court. BP has now filed an emergency motion before Judge Barbier requesting the court enjoin Administrator Juneau from paying the claims at issue.

At all times, BP had a limitless supply of lawyers, accountants and economists involved in the negotiations and they carefully scrutinized the settlement during its drafting. The giant oil company never once raised the issues it’s now raising. In reality, it now appears that BP and its army of experts and lawyers completely underestimated the implications of the settlement’s terms. Each portion of the settlement was the result of hours of intense negotiations between the parties. Perhaps BP didn’t believe many businesses would meet the settlement’s causation tests, or, even upon meeting the causation tests, that those businesses would either fail to support their claims or would show no loss at all.

BP has also realized that it cannot strong-arm Administrator Juneau into getting what it wants. That’s a definite change from how the original claims facility operated. Nobody should be surprised anymore by BP’s conduct. Consider the following:

While the well was spewing tens of thousands of gallons of oil, BP was trying to convince the world the spill was a fraction of its actual size.

When businesses were in shambles due to the spill’s blow on the Gulf Coast tourism industry, BP was spending millions on advertising trying to convince the large media markets everything was fine instead of paying those businesses.

When BP testified to Congress that it conducted a full investigation of the root causes of the spill, BP failed to inform Congress that it intentionally ignored a key root cause as required by its own investigation protocol – a review of the company’s management.

In the early days of the spill, BP went on a “release campaign” in fishing towns like Bayou La Batre in an attempt to sign up desperate fishermen in the cleanup program for pennies in exchange for a full release of their claims. Thankfully, BP’s actions with the fishermen came to light and BP was forced to rescind those agreements.

BP has proven that it cannot be trusted. The company will smile for the camera and say all the right words to create a positive perception, but behind the scenes, it will work tirelessly to keep from having to do the right thing. For these reasons, the efforts by the lawyers on the PSC are nothing short of exceptional. In fact, they are a gold standard in modern litigation. People will never know how hard the PSC had to work to keep BP in check on its responsibilities at every level of this case. The company’s efforts to avoid responsibility, backtrack on its promises, and thwart overall progress are only matched and exceeded by its conduct aboard the rig that killed 11 workers and set off the largest environmental disaster the nation has ever seen.